China’s top nickel supplier aims to boost output of a material used in car batteries by 40 percent this year, joining the ranks of global producers ramping up operations to meet demand from electric vehicles.

Jinchuan Group Co. expects to raise production of nickel sulphate to 70,000 metric tons from 50,000 tons in 2017, Simon Bao, vice general manager of its marketing unit, said in an interview in Shanghai. The country is already the world’s largest automotive market and sales of new-energy vehicles may hit 1 million in 2018 after topping 700,000 last year, according to manufacturers.

“While physical demand hasn’t picked up too significantly yet, it may surge in about two years,” Bao said Tuesday. The company is able to raise sulphate production without any technical barriers, he said, adding that nickel cathode output will be kept at 135,000 tons this year. Cathode is used in stainless steel.

The world’s biggest miners are stepping up efforts to meet demand for battery materials. BHP Billiton Ltd. has begun work to build on a nickel sulphate plant in Western Australia and is considering further expansions. Rio Tinto Group is developing a lithium project in Serbia, while Glencore Plc plans to double production of cobalt in the next two years.

The growing battery market complements nickel’s main use in stainless steel. Demand in passenger electric vehicles will rise to 328,000 tons in 2030 from 5,000 tons in 2015, according to Bloomberg New Energy Finance.

Speculative Cobalt

The demand outlook helped push up nickel prices by 27 percent in London last year, the best gain since 2010. The metal traded at $12,420 a ton on Wednesday, and Bao said prices may average around $12,000 this year or “a little bit higher” amid a decline in global stockpiles. Rising Indonesian production of nickel pig iron, an alternative to refined metal, and a stalling in the expansion of China’s stainless steel output are downside risks, he said.

Jinchuan also produces cobalt, another battery metal. The company plans to nudge up production to 11,000 tons this year from 10,000 tons in 2017. Cobalt “has gone up too sharply because of speculation, and the gains are not justified by real demand,” said Bao. Prices surged about 145 percent last year to the highest in almost a decade, according to Metal Bulletin data.

The shares of Jinchuan Group International Resources Co., the group’s Hong Kong-listed unit, almost doubled last year. They fell 1.5 percent to HK$1.33 on Thursday.